Question
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Projected diesel shortages could become a crisis if winter conditions are severe, potentially knocking out already strained power grids. What strategies should refiners rely on to increase distillate-range material?
Feb-2023
Answers
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Joris Mertens, KBC (A Yokogawa Company), joris.mertens@kbcglobal
The availability of electrical power in January/February 2023 causes concern throughout Europe. However, in Europe, where mid-distillates generate very little power, power availability concerns are not driven by a shortage of diesel but rather by a potential lack of natural gas. The absence of a substantial part of the nuclear power generation park in France further exacerbates this situation. Despite this, diesel is in short supply because of the self-imposed reduced distillate supply from Russia. The ability of refineries to switch from naphtha to diesel is limited by the facility’s design.
Arbitrage, trading, and international groups are better positioned to capitalise on soaring diesel prices. In addition, it is well known that refiners can maximise diesel production in the short term, primarily by adjusting fractionator cut points. This option should be built into the refinery LP and site operational optimisation procedures. Severity reductions on cat and hydrocrackers shift product selectivity from lighter to middle distillate products. However, they risk reducing the yield of high-value products (FCC light olefins) or increasing lower-value residuals (on the hydrocrackers).
As a result, KBC observed through performance improvement studies that refiners often leave money on the table due to a variety of very technical (such as failing advanced control), communicative, and organisational issues (such as inadequate data collection and monitoring, or poor shift team handover).
Meanwhile, investing significant capital to maximise diesel yield is probably not worth consideration. In spite of soaring diesel prices, the surge of hybrid and fully electric vehicles should not be ignored. The shortage of diesel will probably not persist long term.
Feb-2023
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